DeMarco, the acting director of the Federal Housing Finance Agency, had the gall to tell National Public Radio this morning that one of his major responsibilities was to make sure that Freddie Mac didn’t lose money. NPR, by the way, was one of the agencies that broke the story in the first place.

Eddie, you’re a now a government-run company. You were semi-private at one point, but now you are an arm of the government. You should be looking out for the homeowner, and that’s it. You can claim that these investments, which for all intensive purposes were betting against homeowners, were just routine financial transactions.

We ain’t buying it.

Freddie Mac was created solely to help ease up the mortgage market and make it easier for people to get into homes. Anything counter to that, which clearly these investments were, goes against your mission statement. We’re not interested in profit, we want to see more people in homes.

It’s a highly disturbing, and completely shocking report. ProPublica’sJessie Eisinger and Chris Arnold of NPR claim that the government-owned mortgage company was investing in securities that paid substantially more if people continued to pay off high-interest mortgages.

At the same time, they were tightening the grip on credit, making it difficult for homeowners to refinance and get out of such mortgages.

So what was good for Freddie Mac’s bottom line was diametrically opposed to what was right for some people who had mortgages with them.

Now Freddie Mac officials claim there was a Chinese wall set up between the staffers responsible for their investments and those who dealt with credit regulations.

They deny there was any intent to manipulate credit regulations to enhance their pockets, and the investigation offered no evidence that there was.

Yet they’ve already agreed to stop making these risky investments, known as inverse floaters, after the Federal Housing Finance Agency leaned on them once the investigation became public.

Even if you buy Freddie Mac’s explanation, it doesn’t soften the blow. The conflict of interest here is unequivocal. The company is now essentially, owned by the taxpayers, and has a direct impact on who and who can not get a home loan.Continue reading→